Tesco

Tesco sees tougher times ahead

By Maggie Urry

Published: September 30 2008 08:22 | Last updated: October 1 2008 02:34

[pic]Tesco is facing “powerful economic headwinds” according to Sir Terry Leahy, chief executive of Britain’s biggest retailer.

Reporting an 11.3 per cent increase in first-half profits before tax to £1.44bn, Sir Terry said that achieving the increase “hasn’t been easy”. The figures were in line with expectations and the shares rose 17.7p to 387.6p.

EDITOR’S CHOICE

In depth: UK retail results - Jan-29

Tesco adds 100 discount lines - Feb-12

Tesco picks insider for finance chief - Jan-27

Tesco gets ready for ‘very tough’ year - Jan-13

Tesco to reveal effects of difficult Christmas - Jan-11

Tesco plans big Boxing Day opening - Dec-16

Consumers were under strain, Sir Terry said, and Tesco was adapting its business to suit more austere times. He said Tesco had to “help the customer to spend less, it’s no use trying to make them spend more”.

The launch 10 days ago of a range of exclusive brands at prices 15-20 per cent cheaper had been well received by customers and made Tesco a larger discounter in the UK than Aldi.

The recent turbulence in financial markets also brought opportunities for Tesco’s personal finance business, Sir Terry said. It plans to offer current accounts and mortgages.

Andy Higginson, the finance director who is moving to head Tesco’s services business, including its bank, said the number of people applying to open savings accounts with Tesco had doubled in the past week as people searched for names they could trust.

Sir Terry also said the international businesses had contributed half of the rise in profits, although they made up less than a quarter of the group total.

Tesco disclosed for the first time the trading losses in its Fresh & Easy US business. These totalled £60m, much in line with estimates, as the near-90 store chain carried the overheads of a business capable of running several hundred...